EC Should Move to Be Telecom Czar, Reding Says

The EC has been mulling the idea of a single EU regulator. The option most widely discussed has putting the ERG in the role. But that body has shown reluctance to do so, except in cross-border or pan-EU markets like spectrum licensing (CD Feb 28 p10). The debate is said to have slowed progress on framework-review legislative proposals originally due in the summer (CD May 11 p2).

EC success at cutting international mobile roaming rates “should have shown you that we have a European telecom regulator already: It is the European Commission, which is a truly independent and supranational European institution,” Reding planned to say. To have a true internal market for telcos and users, she planned to add, NRF reform must boost EC power over national telecom markets: “Telecommunications is clearly a field where we need more Europe, not less.”

Legislative proposals also will address “how to improve the work of national regulators and how to combine their work in a new European logic,” Reding will say. An existing ERG framework of “loose cooperation” among NRAs is “clearly insufficient for the challenges of the digital age,” and changes must balance the need for federal vs. decentralized solutions.

By the “new European logic,” NRAs’ expertise on their own national markets will be combined with a stronger EC role, particularly in enforcing competition remedies, said a source close to the matter. The ERG will be upgraded, with a permanent president and staff, with authority to render opinions reached by majority vote and weighed when the EC rules on national remedies, the source said.

The new ERG role would arise such cases as those where the EC tells an NRA to impose broadband access rules on an incumbent but the regulator doesn’t do so or takes an unnecessarily long time to act, the source said. The EC then could ask the ERG for an opinion on what to do next; the ERG would adopt a majority position that the Commission likely would follow in issuing an order legally binding on the national regulator, he said.

The NRF proposals have 2 main aims, Reding will say: More competition in telecom markets, especially broadband, where available radio spectrum will be made available for wireless broadband services, and a complete internal European telecom market. Spectrum management will change from “command & control” to more flexibility in using scarce resources. And Reding says she might authorize NRAs to force telcos to split their network access from their service divisions -- an intrusive remedy, “functional separation,” ordered only in exceptional circumstances.

Europe’s 2 main telecom trade groups aren’t taking sides on picking a super-regulator, saying they focus on policy results. The European Competitive Telecom Assn. wants an institution with enough authority and credibility to keep European telecom market harmonious, but officially backs no specific solution, said Chmn. Innocenzo Genna.

The European Telecom Network Operators’ Assn. (ETNO) isn’t clear on what Reding is proposing, a spokesman said. Her comments could be read to mean that the EC is returning to a proposal to give itself “veto” power over remedies imposed by NRAs, or to beef up the ERG. The question isn’t who’s in charge of harmonizing telecom markets, but what sort of harmonization at the EU level is envisioned, he said. Any institutional arrangement should be designed to further deregulation, the spokesman said.

ETNO fears functional separation as a regulatory tool. It called the remedy “out of touch with today’s increasingly competitive and multi-platform telecom markets.” It’s also very costly and could affect all operators’ access prices, the spokesman said.

The debate over a Euroregulator shows that the EC and ERG see that regulatory fragmentation among member countries jeopardizes market uniformity, Genna said. The discussion has pushed both bodies to address questions they otherwise might have missed, he said, and so is a “useful exercise.”